Private Debt – Here to Stay 

Ladies and gentlemen, please introduce yourselves and your organizations. 

Agnes Froehlich: I am responsible for Private Equity and Private Debt at KZVK Cologne. KZVK has been investing in Private Equity for many years, initially through fund-of-funds and for several years now almost exclusively through single funds. Private Debt is the newest and smallest asset class within Private Markets, where we also invest in Private Equity, Infrastructure, and Real Estate. We initially set up the Private Debt topic with a consultant, but now we handle it ourselves. 

Guido Justen: I have been with Helaba Invest for eleven years. Before that, I worked for 20 years in direct lending. At Helaba Invest, we manage clients on topics including Corporate Private Debt, as well as Real Estate Debt. Since 2015, we have been investing in Corporate Private Debt for clients. 

Ralf Kind: At Edmond de Rothschild Real Estate Investment Management since 2019, I hold two positions. I lead the German business for Rothschild REIM, which includes equity investments and asset management. I was also hired to build the European Real Estate Debt business, and am the fund manager for the existing Debt Funds. The first two funds are currently being invested, and the third is now in the marketing phase. 

Malte Kleindiek: I am responsible for Rates and Private Debt investments at Provinzial Asset Management. Following the merger between Provinzial Rheinland and Provinzial NordWest, we now manage around 45 billion euros, including funds for our first external clients. In 2018, we made our first investments in Corporate Direct Lending, initially mainly through fund-of-funds structures. Now, we invest in single funds. 

Ingo Matthey: I built the German institutional business for M&G Investments. M&G Investments is the asset manager of the M&G Group. We were previously part of Prudential plc in the UK. In the overall group, we are both asset manager and asset owner. We have 368 billion Euro in assets under management, a significant portion of which comes from our internal clients. Of those assets, 86 billion Euro are in the alternative investment sector, of which 22 billion Euro are in alternative credit. 

Christian Leuchtweis: I am a Senior Director at Scope in Frankfurt, responsible for the analysis and due diligence of alternative investment funds in the areas of Private Equity, Private Debt, Infrastructure, and Real Assets. 

Markus Bannwart: I am responsible for alternative investments at Universal Investment. The product unit encompasses the entire lifecycle of fund vehicles, especially fund structuring and fund launches. Private Debt is a very important component for us in the Private Markets segment. More than 260 structures are spread across our fund domiciles, with around 60 of these in the credit area. 

How do your organizations define the asset class Private Debt? 

Ingo Matthey: We have a relatively broad definition of Private Credit. Essentially, these are loans primarily provided by non-banks. Our definition of Private Credit also includes segments such as Broadly Syndicated Loans and Structured Credit, including Specialty Finance. 

Malte Kleindiek: From the perspective of the Private Markets side, Private Debt can be understood as an umbrella term. It is always important to clarify the terminology. I, in turn, would not have included Structured Credit in the private debt category. We are not active in that area. For us, Private Debt includes Corporate Direct Lending and infrastructure financing. 

Ralf Kind: When we launched our first Real Estate Debt Fund four years ago, I often heard questions in investor discussions like: What is Real Estate Debt, and how should I allocate to it? What bucket does this fit internally as an investor? Many viewed Real Estate Debt as a replacement for Real Estate and tried to fit debt investments into the equity ratio. Some LPs saw it as a fixed-income product, especially regarding senior debt strategies. Today, there is a broader understanding of the asset class and clearer classifications. 

Guido Justen: There is no definitive view on the definition. Historically, Corporate Private Debt originally had mezzanine funds. Then came the financial crisis. There were already a few infrastructure debt funds. After that, the topic of direct lending opened up. Overall, I see the asset class Private Debt as a dynamic evolution topic that depends on the attractiveness of the various themes. 

To what extent is this asset class consistently illiquid? 

Christian Leuchtweis: Liquidity is a characteristic that distinguishes Private Debt. I would also exclude CLOs and ABS from this category and not classify them as part of Private Debt universe. The history of the Private Debt asset class began with mezzanine funds before the global financial crisis. Banks were predominantly not able to provide debt financing due to a tighter regulatory regime (Basel III, Volcker Rule etc.) and higher capital requirements for certain segments of the credit market as well as increased risk awareness. Therefore, general partners and specialized asset managers discover this segment and filled this funding cap after the financial crisis. The long-standing low-interest rate cycle and negative interest rates for several years have significantly increased the importance of private debt as an asset class. 

How does the asset class stand now after two years of rapid interest rate hikes and a new interest rate reduction cycle? 

Ralf Kind: The recent interest rate cuts do not change the structural trend of banks increasingly withdrawing from real estate financing. This is a significant driver. After the global financial crisis, we saw that banks became increasingly restrictive in their lending due to regulatory requirements. This does not mean that banks do not want to finance. However, their focus is more on their core clients or simple financing. Once a real estate project becomes a bit more challenging, banks tend to hold back significantly. This is rapidly increasing the share of alternative lenders or debt funds. Whether interest rates are high or low is not crucial. 

Agnes Froehlich: We see it similarly. Our private asset classes are not completely detached, but we view them independently of interest rate cycles. Once you invest in Private Debt, you stay invested. We do not say at falling interest rates that we will exit and then re-enter at some point. Private Debt investments only make sense if you invest continuously. 

When and how did KZVK Cologne enter Private Debt? 

Agnes Froehlich: That was in 2019 during the low-interest phase. Since we did not have the expertise and access to the market, we opted for a consultant. Private Credit is the only asset class for debt capital investments in the Private Markets segment. Our goal was to achieve as low a correlation as possible with the other three asset classes. For this reason, we decided to focus on the sponsorless part of the market and the area of asset-based lending. Our consultant advised us very well in the first three years and helped us select GPs and funds. After that, we could do it ourselves because we had access to the GPs. Today, the Private Debt share is in the low single-digit percentage range of the total portfolio and has been steadily increasing for several years. 

How is Provinzial invested in Private Debt? 

Malte Kleindiek: One reason for us to enter the asset class was the low-interest rate environment, which created a certain pressure on investment returns. At that time, the asset class was still relatively new. We initially entered the market through a fund-of-funds structure to build market beta and broad exposure. Over the years, we have outgrown that. With the merger of the two Provinzial companies, the capital volume became so large that we shifted to single funds. At the same time, we also had the resources to manage this internally. We now make the fund manager selection ourselves. 

Are fund-of-funds the typical entry vehicle for investors entering this asset class for the first time? 

Christian Leuchtweis: Yes, when we look at our investors, this reflects institutional investors well. We also see fund-of-funds among larger capital collecting institutions. They actually have significant know-how and are accustomed to direct lending, whether in real estate or in the infrastructure asset class. They select the funds themselves through which they can also develop their private markets strategies. However, this is still more the exception in private debt. Institutional Iinvestors and capital collecting institutions still primarily focus on single funds as well as fund-of-. In selected market segments, they are now also investing directly. 

Ingo Matthey: On the real estate debt side, we currently do not see fund-of-funds but rather mandates or external consulting. Investors want to avoid the second layer of fees, at least reduce it, and approach the topic as needed. Often, investors in corporate direct lending initially set a target allocation and realize this with a consultant. This allows them to invest more purposefully than through a fund-of-funds, which may not precisely meet their needs. Sponsorless in the area of senior direct lending I still consider a challenging topic. 

Agnes Froehlich: It is a niche topic but not difficult. 

Ingo Matthey: A niche because access is more difficult, and the credit market for companies with strong ratings is still dominated by banks. We like to work with sponsors; it is simply a more relevant market. As an asset manager for an insurance company, we invest rather conservatively and focus on senior direct lending. This segment has become significantly more attractive against the backdrop of rising base interest rates. From a supply and demand perspective, this is an interesting market. 

Guido Justen: For us, fund-of-funds are primarily a question of scale. If I, as an investor, have 10 or 20 million euros to invest in the coming years, then a fund-of-funds product will certainly fit. If I have a larger volume to invest, perhaps need to build up know-how first, and do not want to do everything myself in the first step, then the consultant is good. They will recommend: „Don’t take the train, take the Vespa.“ Once you have built up the know-how, doing it yourself is certainly an option. And regarding resources and capacities: If an investor wants to do everything – meaning covering four asset classes globally in the alternatives space – that is ambitious for one person. From my perspective, one should not enter the market and say, „I know everything.“ That quickly leads to a dead end. 

What about direct investments and co-investments? 

Markus Bannwart: For direct lending, we see Luxembourg as the preferred fund domicile because it offers a wide range of fund vehicles and a very professional service provider environment. The focus here is on the reporting, valuation, and administration of loans. When investing in target funds through a fund-of-funds, we see no significant differences between our fund domiciles in Frankfurt, Luxembourg, and Dublin in terms of design. Depending on specific requirements, one location may be more or less suitable. Direct investments and co-investments are currently more prevalent in the portfolios of individual asset managers due to their volume, which can then be incorporated into individual fund-of-funds strategies. These fund-of-funds strategies are primarily suitable for achieving broad diversification and managing investments across multiple investment strategies. 

Have more access opportunities to GPs arisen for LPs in recent years? 

Agnes Froehlich: We see many GPs operating here in Germany and offering their products. We are working in a relatively limited market segment and are not looking for much. On average, we make about three to four tickets per year, so the selection is large enough for us. 

Malte Kleindiek: For us, it was crucial that we have built and deepened our competencies over time. GPs find you on their own. Of course, you get much closer to the GPs if you do it yourself and are also active in the single-fund space. 

Is the Private Debt asset class still heavily tied to financing Private Equity transactions in Europe? 

Christian Leuchtweis: If you compare the number of Private Debt funds that provide debt financing for sponsored and sponsor-less transactions, there is still a higher allocation to transactions of sponsored funds, i.e. private equity. It is primarily Private Debt funds that finance Private Equity transactions. On the other hand, Germany has a very pronounced and established SME sector. Thus, there is a need on the part of SMEs to obtain loans from non-banks, especially when banks withdraw from certain market or industry segments. The popular and significantly larger area remains sponsored finance. 

What is the size of the global Private Debt market? 

Christian Leuchtweis: BlackRock recently published a study on the Private Debt market with projected growth figures. These are expected to rise from around 1.4 trillion to nearly 3.5 trillion US dollars by 2028 – according to BlackRock – Global Credit Outlook: 4Q 2024. When you lay out the Private Markets asset classes side by side, you will expect the highest growth rates in the Private Debt segment. The asset class is established among institutional investors not only in the US and the UK, but also in Europe. It is a relatively stable asset class and has little correlation with public equities or equity-like products. There are regular interest coupons that are also variable and thus exhibit hardly any duration risks. These instruments have benefited from the interest rate hike cycle since 2021 through higher coupons. Many institutional investors have now had good experiences with Private Debt and are choosing to replace parts of their traditional c bond allocation, especially high-yield bonds, with Private Debt. 

Agnes Froehlich: The German market is very small in the area of Private Debt. We would generally like to invest more in Germany, and there are also some funds that primarily invest in Germany. However, their sponsorship share is often relatively high due to the SME sector, but overall the funds have a small volume. 

Was Fixed Income an alternative to Private Debt for you in light of the changing interest rate landscape? 

Agnes Froehlich: We have not shifted our allocation in favor of Fixed Income. 

Malte Kleindiek: Initially, we entered Private Markets due to yield pressure. Of course, an environment in which the guaranteed interest rate for life insurance is available nearly risk-free again, is something that encourages a return to classical Rates investments on the balance sheet. In general, we still consider Private Markets and specifically Corporate Direct Lending to be attractive. These asset classes are expected to continue to yield attractive returns and maintain a firm place in our portfolio. 

Many institutional portfolios have already achieved a high degree of diversification today. Is there still room for new investments in Private Debt? 

Guido Justen: Ultimately, this is an investor decision. We recommend broad diversification. Investing in Private Debt is a learning process. It takes time to understand all the dimensions of the asset class. How do the markets and managers function? The best thing is to observe and relate things. What fits me as an investor and my strategy? The person managing the portfolio for the investor must be able to represent and assess to their committees whether the investment is performing well or less well. Therefore, an investor should always be involved in the decision-making process whenever possible. 

Agnes Froehlich: It is all the more important that as an investor, you are continuously invested in the products across all phases and remain so. Only then do you learn to understand how the product behaves in different market cycles. And only then can you generate a continuous return. 

One characteristic of Private Debt is inflation protection. Has the asset class passed its test in this regard over the past two years? 

Agnes Froehlich: We can say that. Especially in asset-based lending, because the underlying asset also has a certain value that rises with inflation. Thus, it is linked to inflation. However, it does not provide 100 percent inflation protection – depending on where the interest rate is and how high inflation is. 

How important are regular cash flows to investors in Private Debt? 

Ingo Matthey: Ordinary income is an important point for clients, not just in Private Debt but also on the real estate equity side. This is the case with all asset classes when an investor has regular obligations. 

Markus Bannwart: The predictability, regularity of returns, and type of returns make Private Debt attractive. Looking at developments on our platforms and the studies published in October, I get a clear picture of the areas where investors want to increase exposure: These include Private Debt, especially corporate and infrastructure financing, as well as investments in infrastructure. Real Estate Debt is also expected to grow stronger again. 

Ralf Kind: It is the relative security that matters. Investors have a need for safe products. A debt investment is safer than an equity investment. This is especially true for senior debt strategies, which are structured with a loan-to-value ratio of 60 percent on the repriced asset value and secured with a mortgage. Here, there is an equity cushion of 40 percent in financing. This is also attractive from a risk-return perspective. The return on debt investments is sometimes higher than the return on equity strategies. This is not sustainable, but it reflects the current market distortions. This will correct itself over time. Risk-return is a very important aspect for investors. 

Ingo Matthey: We see this similar with senior or whole loans in the real estate debt segment. Currently, conservative real estate debt investments can achieve returns that correspond to core real estate equity investments, with equity still serving as security or a buffer. It makes real estate debt currently attractive for investors. 

Real Estate Debt is still a young asset class in Germany. How has it developed in recent years against the backdrop of the real estate crisis? 

Ralf Kind: The first real estate debt funds were launched in England after the Lehman’s crisis, which invested only in the UK. The first wave was from 2011 to 2014. As the market in the UK became too small, GPs expanded to the continent. However, they struggled to find loans and build the origination business. From 2015 to 2017, GPs gradually emerged on the continent with a series of real estate debt funds, also in Germany. Initially, they focused only on their home countries in a single-country strategy. This has since evolved. From 2018 to 2020, GPs like us started, who have their base in Germany but invest across Europe. Due to the rapid interest rate developments since 2022, many of the German debt fund GPs are completely underwater or have already exited the market. Germany has experienced a significant value correction in the real estate sector. Traditionally, Germany has always benefited from low capital and financing costs. The sharp rise in interest rates has broken many balance sheets and capital structures. Some LPs have not only invested through funds but also directly through their balance sheets, and they have burned their fingers. Those who invested across Europe and diversified more have a more robust portfolio. 

What role do new construction projects play in Real Estate Debt? 

Ralf Kind: We are always very selective with development financing. Among our eight debt investments, there is only one project development financing. In Barcelona, we are financing a life science project as a conversion. The sponsor is a Spanish investment manager along with two large German family offices that provide the majority of the equity. 

What are typical LPs entering Real Estate Debt? 

Ralf Kind: In our first debt fund, which we launched during the COVID pandemic in 2020/2021, around 80 percent of the capital is German, mainly from insurance companies. Solvency II plays a role here. For insurance companies, it is very interesting from a regulatory perspective to invest in debt capital. The collateral requirement with regulatory capital is significantly lower than investing in equity structures. 

Ingo Matthey: M&G set up its Real Estate Debt team in 2009 and made its first investments. In the past, we underweighted Germany because transactions were less attractive compared to other countries. Pfandbrief banks and German commercial banks were very heavily involved in real estate financing, and in other countries, we could provide loans at more attractive conditions. Our investors are primarily insurance companies, pension funds, and pension schemes, mostly from Europe but also from Asia. We provide whole loans to borrowers, and depending on investor needs, we also divide loans into senior and junior loans to achieve the desired risk-return profile. 

How has Real Estate Debt grown in recent years? 

Christian Leuchtweis: We have seen increased inquiries, also for illiquid credit strategies, in the real estate sector. It is a relatively new topic compared to infrastructure or classical corporate financing on the Private Debt side. The market is no longer in its infancy, but it has developed relatively late in the Private Debt segment in Germany or the German-speaking region. 

How significantly is the asset class affected by the real estate crisis? 

Christian Leuchtweis: Of course, we have seen changes due to the altered financing environment, but real estate equity is significantly more affected than real estate debt. As a debt provider, you have an equity cushion above you which must absorb the first losses. The debt financing costs have changed substantially. If you have paid – as a real estate borrower – the yield of a German government bond, which was in negative territory for several years, plus a credit spread, and suddenly the ten-year German Bund yields 2.50 or 2.70 percent plus a market-typical credit premium, then the overall cost of debt financing is substantially higher. As a consequence, the number of real estate transactions declined significantly. 

Ralf Kind: INREV, the European association for investors in non-listed real estate, publishes an annual Debt Fund Universe for Europe. According to this, we have 123 reported real estate debt funds in Europe with a target equity of around 70 billion euros. The average size of such a debt fund is just under 600 million euros. Five years ago, when I started building this business area for Edmond de Rothschild, it was about 30 billion euros in equity or assets under management. The study clearly shows that many of the LPs surveyed still want to invest in real estate through debt structures. 

How is the third asset class, Infrastructure Debt, developing? 

Guido Justen: Before 2010, there were globally perhaps a handful of managers for Infrastructure Debt. Now we are at around 120 managers globally. The interest comes more from the subordinated debt side because the yield is more attractive. On the senior side, it is a bit of a duration play, where you take the long interest curve and say: I get to 5 percent with a duration of 13 to 15 years. On the subordinated side, the holding period is more like four to five years. After that, you will ultimately refinance. The market has grown a bit since then. The majority are generalists in terms of many different sectors. There are also specialists, particularly in the renewable energy sector. The trend will increasingly move towards specialists. 

What returns can be achieved with Infrastructure Debt? 

Guido Justen: In the senior segment, you are somewhere in the range of 4 to 5 percent in euros. In the subordinated segment, the normal range is 6.5 to 8 percent. Some individual managers deliver even more and are in the range of 9 to 10 percent in euros and net. 

What are the returns for Real Estate Debt? 

Ralf Kind: For a whole loan that is first lien secured and finances a value-add property or project, the interest costs are not below 6 percent. Based on our current pipeline, including the UK, the average is likely around 8 percent. The vast majority is structured as fixed-rate loans. For mezzanine loans between 60 and 80 percent loan-to-value, the interest costs are currently between 12 and 14 percent. 

Mr. Kleindiek, how is Provinzial allocated in Real Estate Debt and Infrastructure Debt? 

Malte Kleindiek: We are not allocated in the real estate sector, but we are invested in Infrastructure Debt. We started with senior financing in the investment-grade area. The cash flow profile there fits a life insurer very well. We have set up two mandates such that we can implement transactions that fit our profile. We also have the sufficient volume and size for this. We have purchased a very good spread of significantly over 250 basis points in the investment-grade segment. Sourcing was perhaps a bit challenging because not much has happened in the market over the last 18 months, but we are still on track. Therefore, we are very satisfied with this part, but we currently assess the attractiveness of the non-investment-grade area to be somewhat higher. Like many others, we would like to do more renewables. It is difficult to compete in the senior segment with banks. 

Agnes Froehlich: KZVK Cologne is not invested in dedicated infrastructure or real estate debt funds. We work with a GP in the area of asset-based lending, which also serves infrastructure and real estate topics among others. 

Let’s move on to the topic of manager selection. What are your experiences? Have your views on managers or your selection criteria changed today? 

Malte Kleindiek: We have a clear focus on established tier-1 managers. Experience and know-how are very important to us. A broad and experienced team in the investment committee is important, but also below that a really large know-how should be present. Workout expertise is also important to us. 

Ingo Matthey: We have been active in the direct lending space since 2009 and so far we have invested for our internal client through mandates and for external investors through multi-asset credit funds. What we keep hearing is that a first-time fund is challenging. Therefore, in our first fund, there will be a substantial investment from our own house. This demonstrates commitment and is received positively. There are already many providers, but in the area where we focus senior/stretched senior in the lower to middle market, the competition is less intense. 

Markus Bannwart: An interesting aspect is evaluating manager performance over the entire lifecycle of the fund. How have the manager and the assets performed during crises over the fund’s term? And how effective was the liquidation of the assets at the end of the term? A functioning exit strategy is also crucial. We find that exit strategies are not always sufficiently considered and well-anchored, and some funds have to hold assets far beyond their intended term. This is not always in the best interest of investors. There will be significant demand for asset managers and service providers capable of establishing and implementing optimal risk-return profiles for financing. Investors will continue to rely on third-party ManCo models, that aim to connect the right partners for each asset class. 

Let’s look to the future: How will the individual segments Corporate Private Debt, Infrastructure Debt, or Real Estate Debt develop in the next two to four years? 

Agnes Froehlich: From the LP side, Private Debt is here to stay. The asset class initially had a somewhat exotic, foreign feel, like other private asset classes. The advantage of Private Debt is that many LPs have already established other private asset classes. This is now the latecomer. We also expect that there will be more providers in the future. Private Debt will take up a larger share in the portfolios of institutional investors. 

Guido Justen: I also believe that it is not a new asset class but an established one that has existed in some form for decades. When you look at market trends or the various asset classes in debt, Corporate Private Debt is the most advanced. The laggard is rather the infrastructure loan segment. Here, there will be stronger specialization. 

Ralf Kind: We will increasingly follow the American model in Europe. There, the share of Private Debt in real estate financing is around 40 to 50 percent. In the UK, the share of alternative lenders, meaning debt funds and insurance companies, is around 30 percent. On the continent, we are at 15 percent. This means that conversely, we still have banks in the credit business for 85 percent. I am firmly convinced that banks will continue to withdraw from this business, and as a result, the market share of debt funds will significantly increase. 

Malte Kleindiek: We see the same for the corporate direct lending market. More and more GPs from the USA are coming to Europe. In the USA, there are also middle-market CLOs. We have seen these for the first time in Europe. This development may continue. And BlackRock has shown with the acquisition of Preqin and the public statements that it wants to become more active in Private Markets. This will increase standardization. 

Ingo Matthey: Banks will continue to withdraw from the business, whether on the corporate, infrastructure, or real estate finance side. What is crucial for us as asset managers is how to specialize and find products that are relevant for both the borrower and the investor. For investors, it is positive that the market is broadening, allowing them to choose their product or investment according to their risk appetite and return expectations. 

Christian Leuchtweis: When I look top-down at Private Debt, it is a segment that has come to stay. The demand for individual credit strategies is likely to increase. I personally apply a generic rule: The return you aim to achieve per unit of risk should form the foundation for the portfolio construction and strategic allocation of institutional investors. Following this principle, the market is likely to broaden significantly. It is an opportunity for dedicated and specialized asset managers, in the respective sub-segment, to be successful. 

Markus Bannwart: Private Debt is not a trend but an already established asset class. Interestingly, we have managed to conduct this discussion without delving into regulation, even though there are noteworthy developments. Notably, the ELTIF, alongside the regulations of AIFMD II and their upcoming implementation in the Fund Market Strengthening Act, will provide greater transparency, standards, and reliability for direct lending and asset managers. The Private Debt market possesses the flexibility and expertise to navigate challenges prudently and responsibly. From our perspective, collaborating with experienced, professional, and trustworthy partners remains the key to success. 

Summary 

Key Facts 

• Private Debt is currently one of the fastest-growing Private Markets asset classes. 

• Institutional investors typically enter Private Debt through fund-of-funds or with the help of consultants. 

• The asset class offers regular, predictable cash flows and has little correlation with equities. 

• The German Private Debt market is still relatively small compared to international standards. 

• The shift in interest rates has not diminished the attractiveness of Private Debt. 

Private Debt has firmly established itself as an asset class and is projected by BlackRock to grow to a global volume of 3.5 trillion US dollars by 2028. The asset class encompasses various segments such as Corporate Direct Lending, Real Estate Debt, and Infrastructure Debt, with definitions varying by institution. Agnes Froehlich reports that KZVK Cologne entered Private Debt in 2019 through a consultant and now invests a low single-digit percentage of its portfolio in it, focusing on sponsorless financing and asset-based lending. Malte Kleindiek describes the classic entry through fund-of-funds structures before transitioning to single funds. Provinzial is active in Infrastructure Debt, focusing on senior financing in the investment-grade area alongside Corporate Direct Lending. 

For Ralf Kind, the withdrawal of banks from real estate financing is a significant driver for the growth of Real Estate Debt. Returns for whole loans, including interest and fees, are around 10 percent, while mezzanine loans can achieve 14 to 16 percent IRR. Ingo Matthey emphasizes the importance of regular returns for investors and the current attractiveness of senior loans in the real estate debt segment, which offer returns comparable to core real estate equity investments. Guido Justen highlights the development in the Infrastructure Debt sector, where the number of managers has increased from a handful before 2010 to about 120 today. Returns range from 4 to 5 percent in the senior segment to 9 to 10 percent in the subordinated segment. 

Scope observes that investors are increasingly replacing traditional high-yield bonds with Private Debt. From Christian Leuchtweis‘ When I look top-down at Private Debt, it is a segment that has come to stay. The demand for individual credit strategies is likely to increase. I personally apply a generic rule: The return you aim to achieve per unit of risk should form the foundation for the portfolio construction and strategic allocation of institutional investors. Following this principle, the market is likely to broaden significantly. It is an opportunity for dedicated and specialized asset managers, in the respective sub-segment, to be successful. perspective, Real Estate Debt has proven to be relatively crisis resistant. Markus Bannwart from Universal Investment emphasizes the importance of manager selection and a well-functioning exit strategy for successful investments.